So You Think You Know About Employment Compliance For Small Businesses

As a small business owner, it’s important to keep up with employment law, whether you have one or ten employees. When small business owners hire family and friends, there is a tendency to be a little lax on what should be in place. The laws make no allowance for employers who do not follow the rules, no matter who they hire. Do you know all you need to know about employment compliance for small businesses? You might think you generally get what needs to be in place, but do you know it all by heart? What employment laws have changed since the last time you looked at them?

Small business owners assume everything will be fine and they can get to tightening up on their employment compliance until something happens. When an employee decides to sue you for damages due to having not workers’ compensation insurance, that is when things get scary. What are you putting off today concerning employment compliance for small businesses that shouldn’t wait until tomorrow?

Employment Compliance For Small Businesses Starts With The Basics 

Before we get to anything more complicated, let’s start with what you need to know to avoid problems with the law. We wouldn’t want the authorities knocking on our doors now, would we? There are a few things you have to have in place to be legally in compliance with hiring people. Yes, even your cousin. 

EEOC Requirements - This stands for Equal Employment Opportunity Commission. Things have changed over the last 10 years on what it means to be EEOC compliant. For starters, many small businesses think this compliance only matters to current employees. That is wrong. EEOC discrimination also applies to applicants. It should go without saying that everyone who submits a resume to your office should be treated as equitably as any other. For the sake of the argument, you cannot discriminate against people who apply, go through the interview process, or who are hired based on any of the following:

• Race
• Color 
• Religion
• Sex (this includes pregnancy, orientation or identity)
• National origin
• Age
• Disability
• Genetic information (including family history)

A discrimination filing with the EEOC is serious. The average settlement when an employer is found guilty is around $40,000 and can be up to $1 million! It doesn’t pay to not know what the rules are with the EEOC. Know what you need to know now before it’s too late. You can find out more about what discrimination means when it comes to employment on the EEOC’s website. 

I-9 Compliance - This is another big one that can be easily overlooked or something a small business owner may not take too seriously, but it can have big implications if it is not followed. In the United States, you have to prove that every employee you have working for you is legally able to do so. You have to prove that by filling out the I-9 form completely and make sure every employee has the correct paperwork they need to verify their employment status with the federal government. Even if you are attempting to keep track of I-9 compliance there are still common mistakes that small business owners make on the forms that get flagged by ICE. Employment compliance for small businesses depends on the business owner. Avoid common errors found in typical I-9 audits by making sure you are properly trained on how to accurately fill out the form in the first place. 

FSLA Wage Compliance - Wage compliance is a big issue with small businesses. Your employees probably know more about it than you do. The tricky part about FSLA wage compliance is your state will have its minimum wage laws that need to be followed also. Even if the current FSLA minimum wage is $7.25 per hour, your state’s minimum wage supersedes the federal one. Have you checked into minimum wage requirements in your state and with the Department of Labor? What about overtime laws with FSLA and your state? Non-complaint labor practices, especially when it comes to paying employees, can cost a small business a lot. You need to stay on top of anything that affects pay and special pay situations. 

Small Businesses Can Protect Themselves By Working With HR Professionals 

Don’t panic. We’re not suggesting you hire a full-time HR professional for your office. Most small businesses can’t afford to hire an HR person anyway. But there is good news; they don’t have to. PEOs do the job of being the outsourced HR arm of a small business. They make sure all of these basic compliance issues are met and much, much more. Not only will they keep you labor complaint, but employment compliance for small businesses is also no longer an issue at all with a PEO. They also take over your companies payroll processing and payroll taxes, benefits and insurance, workers’ compensation insurance, EPLI insurance and more. If you’d like to find out how easy employment compliance for small businesses can be with a PEO, contact us today for a free consultation.